The Rise of the E-Book Lending Library (And the Death of E-Book Pirating)by John BarberFebruary 18, 2011

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One thing not happening as e-book lending booms is the kind of piracy that accompanied the digitization of other media. Where music and film buffs rip and hack, book lovers so far remain content to borrow temporarily on strict terms dictated by publishers, retailers and librarians, allowing the invisible hand of digital rights management (DRM) to ensure they don't cheat -- and that the borrowed materials "return" to their sources automatically....

"Book readers are very honest people," eBook Fling's Burke said. "They're not like the hackers who are trying to steal files from each other."

The last thing Catherine MacDonald did before going to bed the night of Dec. 30 was to ask her husband to remind her to start a Facebook page the next morning about something she just seen on her Kindle e-reader: Amazon.com's decision to allow e-book buyers to lend out and borrow certain titles among themselves. Hooked on her newly acquired Kindle, the Malta-based Canadian business consultant and mother of three thought e-book lending was a terrific idea. She set up the page "just to see if this is something a lot of other people want."

Was it ever: A few weeks later, MacDonald was the harried proprietor of the online Kindle Lending Club, which already has 12,000 registered users making as many as 600 swaps every day. What began as a simple desire to share books with other Kindle users quickly became what MacDonald calls "a crowd-sourced virtual library," one that functions much like the real thing and is quickly being replicated by similar clubs and startups, all of them inspired by the "lending feature" offered first to users of the Barnes & Noble Nook e-reader and then the Kindle.

"It's always great to launch something people enjoy," said MacDonald, who recently rebranded her burgeoning club as BookLending.com. "But to have a service that I personally want to use and that I understand the demand for is really very rewarding."

A few weeks after MacDonald formed the Kindle Lending Club, U.S. distributor BookSwim launched eBook Fling, a sharing site that allows users to swap books from both Amazon and Barnes & Noble. The lending feature offered an irresistible low-cost entrance into a booming market, according to company president George Burke. "We don't have to touch the inventory even," he said in an interview. "All we have to do is find a lender and a borrower, match them up and ensure that the book gets transferred."

Although the retailer-linked sharing sites are still largely restricted to U.S. users -- and Toronto-based Kobo e-reader has yet to offer its own lending feature -- they are collectively creating a booming and completely unanticipated market in previously loved electronic literature. In the meantime, established public libraries are quickly bulking up their own e-book collections, a task made easy by wholesalers that not only provide the files but also the systems that control their lending and recovery.

"The increased demand is tremendous, it's really remarkable," said Vickery Bowles, director of collections at the Toronto Public Library. E-book lending at the TPL increased 88 per cent in 2009 and 70 per cent in 2010 before going exponential after a Christmas that put millions of new e-readers in the hands of consumers. "E-book lending is still a very small percentage of the whole," she said, "but that kind of increase in use is obviously very unusual, and a real signal of how things are changing."

One thing not happening as e-book lending booms is the kind of piracy that accompanied the digitization of other media. Where music and film buffs rip and hack, book lovers so far remain content to borrow temporarily on strict terms dictated by publishers, retailers and librarians, allowing the invisible hand of digital rights management (DRM) to ensure they don't cheat -- and that the borrowed materials "return" to their sources automatically.

Publishers determine which of the titles that they sell through both Amazon and Barnes & Noble can subsequently be lent out, while DRM makes sure the files disappear from lenders' e-readers at the end of 14 days. Public libraries follow similar protocols, as developed by such wholesalers as Cleveland-based OverDrive, which dominates the market with a "one-book, one-user" policy that ensures libraries never lend out more copies of a title than they actually buy in digital form. Typically, library users can borrow the books for three weeks, after which they disappear from their reading devices and become available to other borrowers.

"Book readers are very honest people," eBook Fling's Burke said. "They're not like the hackers who are trying to steal files from each another." Lending clubs like his rely on revenue from advertising as well as commissions received when members decide to buy one of the books they have borrowed -- an option retailers invariably present before their DRM erases a borrowed title at the end of two weeks.

"This type of service doesn't facilitate the transfer of a file," Burke said. "And because we don't touch a file we have no worries about piracy. It's just not possible."

Not all publishers are assured, including Macmillan U.S., whose president Brian Napack recently defended his company's go-slow policy at a conference in New York. "The fear is I get one library card and never have to buy a book again," he said. "So we are hard at work. We continue to wrestle with it."

In response, OverDrive president Steve Potash defended his company's highly controlled library service as a proved response to the threat of piracy. "The fact that one or two trade publishers haven't figured it out yet does not mean that the other 98 per cent are having any problems with it," he said.

Partly in order to mollify publishers -- and partly in order to develop its own revenue stream -- the New York Public Library recently included a "buy-it-now" button on its OverDrive-supplied e-books.

But so far, none of the lending club operators interviewed by The Globe and Mail have experienced any push-back from angry publishers or authors. And for their part, public librarians are determined to forge ahead in a field they pioneered long before retailer-driven sharing sites.

"We have a long history of loaning electronic materials and it hasn't been compromised," the TPL's Bowles said. Publishers may be nervous due to the experience of the music industry, she added, but the public benefit of e-book lending is clear.

"It is extending access to these wonderful materials," she said. "That's what's really exciting about it."